New Delhi, December 2024.
The Reserve Bank of India (RBI) kept its key interest rate unchanged, but cut the cash reserve ratio (CRR) that banks are required to hold, effectively easing monetary conditions as economic growth slows.
The Monetary Policy Committee (MPC) kept the repo rate (INREPO=ECI) opens new tab unchanged at 6.50% for an eleventh straight policy meeting.
“Devendra Kumar pant , Chief Economist, India rating and Research Said‘ The growth outlook has weakened since the last quarter, both domestic and global factors have contributed towards weak growth outlook. Inflation is the biggest risk for any economy and financial and growth stability can be achieved only when inflation is under control.”
“The CRR cut to augment liquidity is likely to impact the market interest rate. The February 2025 rate cut is still not certain, it will be dependent on data.”
Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank said, “The RBI delivered in line with our expectations. While retaining its focus on last mile disinflation being achieved the RBI has taken note of the tightening durable liquidity and hence delivered the CRR cut. We see room for a 25-basis points repo rate cut in February with much dependent on the downside risk to growth which we foresee. Further disinflationary trends and global environment will also be key.”
“Anirudh Garg, partner and fund Manger at Invasst PMS Said, The upward revision of the inflation forecast to 4.8% for FY25 indicates the RBI’s cautious optimism, acknowledging supply-side challenges while aiming to anchor expectations.”
“The CRR reduction… is a welcome move to boost liquidity and support credit growth, especially for sectors such as infrastructure and housing.”
